Econ test 2 DEMAND

Ib death

law of demand

As the price of a product deceases, demand increases

Non price determinants of demand

Income (Normal goods and inferior goods), Taste and preferences, Future price expectations, price of related goods (substitutes and compliments), Number of consumers

Income: normal goods

Buy even with higher income; Most goods

Income: Inferior goods

Higher income doesn’t correlate with higher demand; buy nicer item instead

Taste and pereferances

people favor specific products; wanted even with higher price

Future price expectations

demand will go up or down depending on the expectations of future lower or higher price

Price of related goods

Price and demand of goods are related; price for one changes=demand for other will change

Number of consumers/population

Population goes up=demand goes up

movement along the demand line

Change in price of item

Shift of the demand line

non-price determinants of demand